The Most Important Index to Watch Today

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After several days of selling, stocks rebounded Wednesday, led by the health care sector and, in particular, hard-hit biotech stocks. Bargain hunters pushed iShares NASDAQ Biotechnology Index (ETF) (IBB) up 2% and Health Care SPDR (ETF) (XLV) rose 1.6%.

But buyers were cautious in light of forecasts that the earnings of S&P 500 companies are expected to fall 5.1% in Q3 versus last year.

Former leaders in the technology sector, namely Apple Inc. (AAPL), Alphabet Inc (GOOGL) and Oracle Corporation (ORCL), have been range-bound for several months.

Yum! Brands, Inc. (YUM) startled the Street when it cut its earnings outlook after reporting poor results in China and India. The stock plummeted 18.8%.

Gold was up 0.2% to $1,149.00 an ounce. Crude oil fell 1.5% to $47.81 a barrel. The euro fell to $1.1244, down 0.3% against the U.S. dollar due to weak German industrial production data for August.

At Wednesday’s close, the Dow Jones Industrial Average gained 122 points at 16,912, the S&P 500 rose 16 points to 1,996, the Nasdaq was up 43 points at 4,791, and the Russell 2000 added 19 points at 1,153.

The NYSE Composite’s major exchange traded 1.2 billion shares with total volume of 4.6 billion. The Nasdaq crossed 2.1 billion shares. On the Big Board, advancers outpaced decliners by 3.4-to-1, and on the Nasdaq, advancers led by 2.6-to-1.

SPY Chart
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Chart Key

On the chart of SPDR S&P 500 ETF Trust (SPY), MACD is overbought, there is a strange upside down “V,” and now an attack on the 50-day moving average at $199.84 failed at midday. So it’s no wonder there is lower upside volume than downside volume.

Conclusion

With the financial media’s focus on China, Donald Trump, crude oil and who knows what else, there really is just one important index/ETF to watch: The S&P 500 must close above its 50-day moving average at 1,997 and SPY must forge a successful attack on the $202-$203 line if the bulls are to recover.

A failure to move through that zone before the big bucks from retirement accounts run out (my guess is today) could turn the rally into a big bull trap.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.


Article printed from InvestorPlace Media, https://investorplace.com/2015/10/daily-market-outlook-watch-spy-today/.

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